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Tether's Q1 Reserve Report: Profit Hit Record High, USDT Reserve Surplus
Tether released its Q1 2023 reserve report audited by BDO, which contains many important milestone figures. From its earliest days, Tether has been committed to providing a reliable peer-to-peer cash alternative to the crypto industry and people around the world. Tether's issued proof-of-reserve is a key part of its twin commitment to transparency and stability.
Record net profit from repatriated reserves
Tether achieved a net profit of US$1.48 billion in the first quarter of this year, setting its historical record. That brought its reserve surplus to another record high of $2.44 billion. The reserve buffer provided by net profit is likely to continue to grow each quarter, giving users more confidence as it allows Tether to easily absorb any volatility.
Secured loans continue to decline
Tether continues to reduce its secured loans in line with its previous commitments. Their net worth and percentage of Tether reserves decreased from 8.7% to 6.5%. Tether's ongoing commitment is to reduce secured lending to zero. However, it is worth noting that due to its overcollateralized nature and the efficiency of margin calls, Tether has never experienced any loan losses even during times of crisis and high volatility in the industry.
U.S. Treasury holdings hit record high
During 2022, Tether reduced its commercial paper holdings to zero and began buying U.S. Treasuries for Tether's reserves. As of the first quarter, Tether's direct holdings of treasury bonds reached an all-time high of more than $53 billion, accounting for more than 64% of total reserves. If you were to rank all the countries in the world in order of how much U.S. national debt they own, Tether would be second only to Mexico. These treasuries, along with other reserves in the cash and cash equivalents category (such as overnight repos, term repos, money market funds, cash, and bank deposits) account for an all-time high of nearly 85%, providing Tether with high-quality, liquid assets. Assets for quick sale to process redemption collateral. At the same time, high yields on US 10-year Treasuries have pushed up income and increased Tether’s surplus reserves, effectively overcollateralizing USD₮.
Bank deposits reduced by more than 90%
Tether reduced its bank deposits from $5.3 billion to $481 million in the first quarter, significantly reducing Tether's counterparty risk, particularly the risk of bank failure. These deposits are not concentrated in one bank, but scattered in different banks. Tether's competitors were overly reliant on bank deposits, had trouble with financial system problems, and compromised security.
If the purpose of stablecoins is to provide reliable, stable, peer-to-peer cash to users around the world, then stablecoin users must avoid counterparty risk as much as possible.
U.S. Treasuries and overnight repos serve as 100% reserve for all new Tether issuance
Tether grew rapidly in the first quarter, with USD₮ market capitalization growing from $66 billion to over $82 billion. All funds collected from issuing new tokens are invested in US Treasuries or an overnight reverse repurchase facility (full collateralized by US Treasuries). A total of $7.5 billion is now held in the overnight repo facility, providing Tether with more liquid collateral while reducing counterparty risk.
Increased transparency of gold and bitcoin holdings
For the first time, Tether has included its gold and bitcoin holdings in the reserve category through reserve certification. These holdings represent 4% of total gold reserves and 1.8% of total Bitcoin reserves. Tether continues to strive to be the industry leader in stablecoin transparency.
What do these data show?
Tether’s disclosure of its profits and its full asset allocation to build reserves demonstrates Tether’s commitment to the stability of its token and positions it in a fairly favorable position among financial institutions.
Tether's profits are not distributed to shareholders, but are all transferred into reserves for the benefit of users, which enhances Tether's stability.
Tether reported more than $300 million more in first-quarter profits than Blackrock. Blackrock has been in operation for over 30 years, while Tether is only a decade old.
Tether also reported higher first-quarter profits than Netflix, Starbucks, Cash App, Paypal and many other S&P 500 companies.
Tether achieved these statistical milestones while running a fully collateralized stablecoin company, unlike banks that use fractional reserves to boost profits. Bank runs and crises occur when bank customers simultaneously want to withdraw their deposits. In a crypto black swan event in 2022, Tether was able to redeem more than $20 billion in about 20 days with little effort. In the history of finance, no other bank has been able to undertake a process of this magnitude without going bankrupt.
These milestones would not have been possible without the support and trust that the cryptocurrency industry has placed in us.
other milestones
During the Terra Luna crisis and subsequent crypto bear market, Tether was the only stablecoin to return to its all-time high market capitalization. The USD₮ market capitalization has recently begun hitting new highs as funds flow into Tether in search of a more reliable stablecoin option. Tether's main competitor is currently more than 40% below its all-time high market capitalization.
This represents investors and users choosing USD₮ as their primary stablecoin and exiting other stablecoin positions.
Further demand for USD₮ can be seen in the fact that USDT has been trading at a premium since the beginning of the US banking crisis in March this year.
Tether continues to work on making decisions that will increase adoption and user trust. This includes a commitment to continue improving the reserve mix as market conditions change (lower bank deposits, higher national debt) and to ensure that reserves are not concentrated in one country or region.
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https://tether.to/en/record-profits-reserve-surpluses-and-usdt-at-all-time-highs-a-look-at-tethers-q1-attestation/
Tether will regularly allocate up to 15% of its realized net profits to buy Bitcoin starting this month
Tether will regularly allocate up to 15% of its realized net profits to buy Bitcoin starting this month
Beginning this month (May), Tether will regularly allocate up to 15% of its realized net operating profit to purchase Bitcoin. Tether expects that its current and future holdings of BTC in its reserves will not exceed Shareholder Capital Cushion and will further strengthen and diversify its reserves.
According to previous news, Tether released a proof of reserves in the first quarter, USDT issuance increased from US$66 billion to over US$82 billion, of which the percentage of secured loans in Tether reserves decreased from 8.7% to 6.5%, and Tether’s holdings of U.S. Treasury bonds reached a record high , more than $53 billion, or more than 64% of total reserves, and Treasuries, along with other reserves in the cash and cash equivalents category (such as overnight repos, term repos, money market funds, cash, and bank deposits), accounted for nearly 85%, reaching the highest level in history.
In addition, Tether also reduced its bank deposits from $5.3 billion to $481 million in the first quarter to reduce Tether's counterparty risk.
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Tether Partners with KriptonMarket to Launch Small Business Payments Solution in Argentina
Tether has announced a partnership with KriptonMarket, a deposit and withdrawal solutions platform, that will allow Argentinian users to use stablecoins in the Central Market of Buenos Aires. Buenos Aires Central Market is the largest fruit and vegetable market in Latin America.
